The relevant life policy is seen as one of the most significant and useful legislative changes brought about for the protection of the finance sector. It is a nonregistered single life cover taken out by employers of small businesses in order to protect their employees. This death-in-service benefit is aimed at providing a lump sum to the family of the employee after he passes away. Now, the cost-effectiveness of the policy is one of the reasons why its introduction is considered to be a positive legal change.
While a conventional life policy would mean that the employee either had to pay from his post-tax earning or else from the company’s account that further would be subject to serious tax liabilities, the tax-efficient registered group schemes are generally not available for companies having fewer than 5 workers. Therefore, turning to the relevant life policy becomes the only option for these employers.
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Here are the features of the cover listed in detail:
Features:
1) Availability
The policy is primarily available to employers conducting business through limited liability partnership (LLP), partnerships, or limited companies or else are sole traders. While the life of an employee is covered, the premiums are paid by the employer. “Employee”, here, may include an official or director of the company but not the member of the LLP or else a partner in a partnership or a sole trader himself.
2) Critical Illness Cover
Generally, there is no provision for adding a critical illness cover. But in certain exceptional cases, you might as well be allowed to add such a cover after consulting with the insurer. However, terms and conditions might vary with different insurance carriers.
Life insurance policies can be term or permanent. Term life insurance provides coverage for a specific period, while permanent life insurance provides coverage for the entire lifetime of the insured. The premiums for term life insurance policies are generally lower than those for permanent life insurance policies. To learn more about life insurance click on the website tampa bay business list.
3) Continuation
Generally, there is a provision for continuation of the cover even if your present employer stops paying for it. It will continue to operate if your new employer pays for it or else the policy is assigned to you.
Other Features
There are many other features of the relevant life cover that a potential insurance seeker should know about:
There is no surrender value. If the employer stops paying the premiums in the middle of the term then the cover is simply canceled without any refund.
The insurance plan ceases to provide protection to the insured once he completes 75 years.
There are major tax benefits associated with the cover, ( like Corporation Tax Relief for employers, tax-free premiums, etc.) but the main purpose of the policy should not be tax avoidance.
A trust is in charge of handing over the benefits to the nominees and the employee might as well have the power to indicate one of the trustees. Some of the insurance companies will require the trust to be set up even before the policy is issued.
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